Many consumers, especially when they are new
and inexperienced, are looking for guidance before
purchasing wines. Often they are unsure about the
quality of a wine they intend to purchase and turn to
the published ratings of wine experts for guidance.
This begs the question as to how expert ratings, in
addition to grape variety and regional reputations,
affect the price of wine. What are consumers willing
to pay for such things as the reputation of the
producing region as distinct from corporate brand
reputation, or grape variety reputation, or the published
ratings of wine writers/judges/critics; and
how has that willingness to pay evolved over time?
This paper addresses this question as it relates to
Australian and New Zealand wines, using a hedonic
pricing model. Our analysis extends previous studies
in a number of ways. First, we simultaneously examine
two very large data samples of quality ratings (Halliday
2001 and Winestate 2001), each drawn from the
same base population of wines and consumers, which
enables us to make direct comparisons between them.
Second, we are able to expose changes in reputations
over the past decade when wine markets changed
dramatically. Finally, we include indicators for sensory
quality, producer reputation, variety, and regional
origin for not only Australia but also New Zealand,
which allows us to directly compare both countries on
various grounds (e.g. regional and variety differentials).
The paper is structured as follows. In section II
we briefly review the literature on hedonic pricing
models and their application to wine. Section III
presents the model and the two different data sets
used in the analysis. Section IV details our empirical
results for the markets in Australia and New Zealand
separately over nine vintages. The final section
summarises what has been learnt and suggests
areas for further research.
Many consumers, especially when they are newand inexperienced, are looking for guidance beforepurchasing wines. Often they are unsure about thequality of a wine they intend to purchase and turn tothe published ratings of wine experts for guidance.This begs the question as to how expert ratings, inaddition to grape variety and regional reputations,affect the price of wine. What are consumers willingto pay for such things as the reputation of theproducing region as distinct from corporate brandreputation, or grape variety reputation, or the publishedratings of wine writers/judges/critics; andhow has that willingness to pay evolved over time?This paper addresses this question as it relates toAustralian and New Zealand wines, using a hedonicpricing model. Our analysis extends previous studiesin a number of ways. First, we simultaneously examinetwo very large data samples of quality ratings (Halliday2001 and Winestate 2001), each drawn from thesame base population of wines and consumers, whichenables us to make direct comparisons between them.Second, we are able to expose changes in reputationsover the past decade when wine markets changeddramatically. Finally, we include indicators for sensoryquality, producer reputation, variety, and regionalorigin for not only Australia but also New Zealand,which allows us to directly compare both countries onvarious grounds (e.g. regional and variety differentials).The paper is structured as follows. In section IIwe briefly review the literature on hedonic pricingmodels and their application to wine. Section IIIpresents the model and the two different data setsused in the analysis. Section IV details our empiricalresults for the markets in Australia and New Zealandseparately over nine vintages. The final sectionsummarises what has been learnt and suggestsareas for further research.
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